Inbizzy, Brussels, — The European Commission is set to unveil a sweeping new climate target on Wednesday, proposing a legally binding goal for the European Union (EU) to cut net greenhouse gas emissions by 90% by 2040 compared to 1990 levels. For the first time, the target will allow member states to partially meet their reduction commitments through the purchase of international carbon credits, according to a draft proposal reviewed by Reuters.
The plan represents a landmark shift in EU climate policy, which has until now relied almost exclusively on domestic emission reductions. Under the draft, up to 3% of the 2040 emissions target could be met through carbon credits acquired from developing countries, beginning in 2036. These credits must comply with stringent integrity criteria set by the EU, including proof of origin, time of issuance, and demonstrable environmental benefits.
The proposed flexibility is a response to mounting pressure from several member states — including France, Germany, Italy, Poland, and the Czech Republic — who have raised concerns about the financial burden of meeting climate targets, especially in light of economic strains and heightened defense spending.
While the Commission has yet to comment officially on the draft, insiders say the inclusion of carbon credits is designed as a political compromise, aimed at ensuring broad support for the ambitious 2040 target while maintaining momentum toward the EU’s overarching goal of climate neutrality by 2050.
“Decarbonization is not only essential for the planet, but also a key driver of economic growth when integrated with industrial, competition, and trade policies,” the draft states.
A Controversial Compromise
The carbon credit mechanism would tap into global markets backed by the United Nations and support emission-reduction projects abroad — such as reforestation in Brazil or renewable energy installations in Indonesia — while channeling much-needed climate finance to developing nations. However, the system remains controversial.
Investigations and academic studies have raised doubts about the environmental efficacy of some carbon offset projects, suggesting they may not deliver the promised reductions. Critics argue that leaning on foreign credits could undermine domestic climate investments and weaken the integrity of the EU’s climate agenda.
The EU’s own scientific advisory body has warned against counting carbon credits toward the 2040 target, citing the risk of diverting resources from clean industrial innovation within the bloc.
Member States to Get Sectoral Flexibility
In addition to introducing carbon credits, the draft proposal also grants EU countries more flexibility in deciding how to meet their national contributions. Member states would have greater authority to identify the economic sectors — such as transport, energy, or agriculture — where emissions cuts would be most effective and cost-efficient.
This approach contrasts with the EU’s previous climate targets, which applied more uniform standards across sectors and countries. The new proposal acknowledges the economic disparities and political sensitivities within the 27-member bloc.
Industry Welcomes the Move
European industries, especially in energy-intensive sectors, have expressed cautious support for the inclusion of carbon credits. Business groups argue that the mechanism could ease the regulatory burden and help companies remain competitive amid increasing global climate action and the rise of green tariffs, particularly under renewed U.S. protectionist trade policies.
Still, environmental organizations and climate advocates warn that the EU must not compromise its leadership role in global climate action by diluting domestic ambition.
Legislative Path Ahead
The proposal will now enter a lengthy legislative process, requiring approval by both the European Parliament and the Council of the EU. Given the complexity and the political stakes, negotiations are expected to be contentious and could stretch over several years.
In the meantime, the EU faces a pressing deadline: it must submit its 2035 climate target to the United Nations by mid-September. That deadline adds urgency to internal discussions, even as the continent grapples with one of its most extreme heatwaves in recent history — a reminder of the accelerating impacts of climate change.
Despite these challenges, the Commission insists that its climate roadmap will bolster Europe’s long-term resilience and energy security.
“The message is clear: climate policy is not a burden — it is an investment in Europe’s future,” a senior EU official said, speaking on condition of anonymity due to the sensitivity of the draft.
